BHP Profit Plunges 23% amid China's Economic Headwinds
Sydney, Australia - February 28, 2023: BHP Group Ltd. (ASX: BHP) reported a significant 23% decline in underlying attributable profit for the first half of fiscal 2023, reflecting the impact of China's economic slowdown on demand for iron ore.
Key Financial Results:
* Underlying attributable profit: $5.08 billion (short of analyst estimates of $5.39 billion)
* Interim dividend: 50 cents per share, reduced from 72 cents in the previous year
* Revenue: Driven primarily by copper, which now accounts for 44% of the company's total earnings
Impact of China and Cyclone Zelia:
* China's economic struggles have dampened iron ore demand, one of BHP's main revenue generators.
* Tropical Cyclone Zelia disrupted iron ore production in Western Australia's Pilbara region, leading to a downgrade in production expectations.
Outlook and Strategy:
* Despite global economic uncertainties, CEO Mike Henry expressed optimism about demand for BHP products.
* BHP's share price rose slightly following the announcement, indicating investor confidence.
* The company remains focused on capital allocation, with an emphasis on expanding its portfolio of commodities essential to the energy transition, such as copper.
* India remains a bright spot for commodity demand amid China's economic challenges.
* BHP plans to invest heavily in maintaining and growing copper production in Chile, including a $4 billion investment in the Escondida mine alone.
Executive Transitions and Acquisition Appetite:
* Ross McEwan will succeed Ken MacKenzie as chairman, shifting the focus toward capital allocation.
* BHP remains cautious about inorganic growth opportunities in the current market landscape.
Disclaimer: This information has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed.